AUD/USD Technical Analysis October 12, 2011

The AUD/USD fell originally during the Tuesday session, but managed to pop back up during the later hours. The resulting candle is a hammer-shaped one, and this suggests some kind of support just below where the market sits. It should be noted that the parity level is just above, and it did in fact hold the Aussie down for the second time on Tuesday. The pair looks like it wants to bounce, but the parity level is also where the 50% Fibonacci retracement level sits from the last move down.

The candle shape also suggests that a break to the downside form here would be very, very bearish. In fact, the shape would then be known as a “hanging man”, which is decidedly bearish for the market. The breaking of the Tuesday lows would have us aggressively short of the Aussie yet again. However, we aren’t willing to bet on the parity level holding price down over the long haul until we see this happen.

On the buy side, we simply need to see a daily close above the 1.0000 area. The breaking and closing above that area would have the market looking for the 1.03 area or so, and would be a nice bounce waiting to happen.

As long as the economic scenario worldwide is one of fear though, it will be hard to buy and hold the Aussie for any real length of time though. The attitude of the markets is simply too pessimistic to get that bullish.


EUR/USD Technical Analysis October 11, 2011

The Euro skyrocketed against the US Dollar during the Monday session as it was announced that the German and French leaders had agreed to decide something and come up with a plan for the debt crisis, and to recapitalize the EU’s banks. The biggest problem with this: There are no concrete plans being announced.

Even with this being said, the Euro shot straight up, and the move was impressive. The real question is whether or not there was a real move during the session. The 1.37 resistance level was retested, but continued to hold the price down. The candle is massive and green, so a move up wouldn’t be overly surprising. The move looks like one that could be faded, but we have not seen a negative candle from which to do so.

The pair is still decidedly bearish, and we think that this short-covering move is going to set up for a sell soon. The easiest direction is to the downside, and we still think this is the long-term direction. We will continue to sell rallies, and are currently waiting to see an exhaustive candle or a long red one.

USD/JPY Technical Analysis October 11, 2011

USD/JPY continued to sit still on Monday as traders play “ping pong” with the 76 – 77 range. The Bank of Japan is currently working against appreciation of the Yen, and the USD/JPY pair is the main one that the central bank will focus on. The recent trend is to buy when the pair gets lower, around the 76 to 76.50 level, and to sell it off as we approach the 77 to 77.50 level. The market seems fairly content to sit still and trade in this extremely tight trading range. While we are not sure which way it will break in the long run, we do know the Bank of Japan has made it clear that they will intervene if the pair falls too quickly. Because of this, we are buyers, but only down near the 76.25 level and taking short-term gains, mainly of the 50 pip variety as this seem to be the limit of the current trading range. Selling is tricky, as the threat of intervention still remains.

GBP/USD Technical Analysis October 11, 2011

The GBP/USD pair rose on Monday as traders piled into the “risk on” trade. The market finished the New York session at the top of its recent trading range, and is now at a crossroads of sorts. The 1.57 level has been significant, and we feel there is no reason for this to change. The trend is most certainly to the downside, and this should also continue to be the case as the headwinds out there for the global economy continue to push the markets around.

It was a nice rally, but the fact that we bounced shouldn’t be a big surprise as it had sold off so hard. The market looks set to consolidate between the 1.57 and 1.53 levels for the time being, assuming that the 1.57 holds as resistance. The breaking of that level to the upside would be very bullish, but we still think there are far too many resistive points on this chart to get bullish overall. The 1.59 – 1.60 levels would come into play as possible sell points if the area gave way as well, and the fundamentals around the world still suggest a run to the Dollar is the more likely of scenarios.

If we can break below the 1.53 level, this would be a massively bearish signal and show that this pair has much farther to go to the downside. For the time being, we think that any signs of weakness at the 1.57 level should be sold.

USD/CHF Technical Analysis October 11, 2011

The Swiss Franc appreciated quite strongly during the Monday session as traders sold off the Dollar against almost all currencies worldwide. The move might not have been so much a nod to the Franc, rather a snub to the Dollar. It should be noted however, that the pair only fell to support, and did not break below the important psychological number of 0.90.

The Swiss National Bank has been actively working against the appreciation of the Franc, especially against the Euro. With this in mind, we are not willing to buy it. In fact, we see this move as a potential set up to go long this pair, as the US Dollar is the ultimate safe haven trade, and there is plenty out there that could go wrong presently. Until we break below the 0.88 level, we feel this pair should still continue to climb as traders dare not risk a fight with the Swiss National Bank.

Any supportive candles at the 0.90 level would be very interesting to us, and we wouldn’t hesitate to buy them, and even as a long-term trade as the SNB should continue to work against its currency for the next several months.

EUR/CHF Technical Analysis October 11, 2011

EUR/CHF fell during the Monday session as traders ran to the Franc against several other currencies. While the stock markets and commodity markets all had a “risk on” bias, this is very concerting as the Franc generally isn’t thought of as a “risk on” currency. Because of this, the pair seems to warrant keeping an eye on at the moment.

The pair can’t be shorted, as the Swiss National Bank has stated very publicly that is going to defend the 1.20 level as being too low in this pair and this should continue to keep an upward bias in the pair over the long-term. We are buyers only because of this, and welcome any dips as buying opportunities, and especially so if the Europeans can work out some kind of fix for their debt crisis.

Technically speaking, the pair seems to have significant support from 1.23 down to 1.20 or so, and should remain supportive in this general area. We would buy supportive candles in this zone, and think that it should remain to be a bit of a floor in this market. Selling isn’t agreeable as the SNB is more than likely going to work against the falling prices if they get too low.

AUD/USD Technical Analysis October 11, 2011

The Aussie continued to power forward during the Monday session as traders continue to take on the “risk on” trade globally. The Aussie is very sensitive to global risk, so this move is to be expected. When the stock markets and futures market rise, so does this pair – most of the time that is.

However, we approached the “parity” level during the late hours of the day, and it did stop right at that level. Parity levels are special because they represent the “biggest of the big numbers”. This large psychological number normally produces some kind of reaction, and we expect this time to be more of the same.

As the economic headwinds out there are too many to count, we think this pair has an easier time going down than up over the longer-term. Because of this, we are selling rallies that show signs of exhaustion on smaller time frames. This area we find ourselves in at the moment is a perfect place to look for that. Unfortunately, we have not seen that yet. We will be looking for 4 hour bars, and perhaps daily ones if we get them that suggest selling the pair. We are not going to buy as the dangers are too numerous at the moment. We are sellers, but are still waiting for our signal.

USD/CAD Technical Analysis October 11, 2011

The Canadian dollar appreciated against the Greenback on Monday as trader bought risk around the globe. One of the most heavily bought areas was in the energy sector, especially the oil markets. With this in mind, it is no surprise that the Canadian dollar rose against the Dollar.

The market did fall just down to the support level in the same range we have been watching as a potential buy area. The daily candle does look very bearish though, so we feel that a continuation of the dip could be coming. However, we feel that there are simply far too many reasons to sell the Loonie at this point, and that the pair will likely continue its climb over the next several days.

We are currently looking for a hammer or other such bullish candle in the neighborhood of 1.03 to 1.02, and think this could be a good launching point for more strength. We think that the “bottom” area is the parity level, and a break below that signals continued selling. The overall trend is still down, but we also feel that a massive bounce could be coming as well. We like buying supportive candles at this point.

NZD/USD Technical Analysis October 11, 2011

The Kiwi dollar found itself being bid up during the Monday session as traders expressed relief that the Europeans have decided to agree on some unknown plan in the future to bail out banks. The absurdity of this statement is exactly what gets us so suspicious of any rally at this point, as there really hasn’t been anything fixed, yet the markets have reacted as such.

The NZD/USD is highly sensitive to economic conditions, and as a result rallied hard during the session. However, until there is some kind of concrete deal, it is going to be very hard to get overly bullish on the riskier assets as well as currencies like the Kiwi. The pair simply has too many things waiting to ambush it out there for us to be comfortable buying it.

The bounce from the 0.75 level has been impressive so far, and we even could see a continuation of the run up to the 0.80 level in the short-term. However, there really isn’t anything pushing this pair forward, other than some potential short-covering. Because of this, we are waiting to see if some kind of shooting star or bearish candle forms between the current level and 0.80 from which to sell.

Oil Technical Analysis October 11, 2011

Light Sweet Crude

The CL contract rose on Monday as traders took on more risk globally. The market looks like it is currently in the process of widening the trading range that market participants will be comfortable with. Previously, we had a range between the $80 and $90 mark, but now it appears that with the recent lows being put in, that the area that will be tradable will be between $90 and $70. This is a significant widening. The market looks strong, but we would be hesitant to own crude near the $90 mark as we see it as resistive. We are looking for weakness to see, especially closer to that mark.

Brent

Brent markets reacted to the global rally and gained over $2. The market has recently made a lower low, and this suggests that the path of least resistance is down. We see that the $100 area above is resistive, and we think that selling will resume at that area. Because of this, we are sellers on signs of weakness at that level. We don’t buy now that the market has risen so far, as it would only be chasing at this point, which of course is a great way to lose money.

With the global markets being so fearful these days, any “risk on” trade like oil has to be treated with suspicion. Because of this, we still like selling rallies, but only at resistance levels. The overall trend still looks weak for energy in general and we fell this should continue to be the case over the next several months. Until we can break above $100 in CL and $120 in COIL, we are not going to be buying oil as it is simply a momentum trade and susceptible to false breakouts and whippy trading.

Natural Gas Technical Analysis October 11, 2011

Natural gas markets rose on Monday in a rare show of strength for what could possibly be the most beaten up market out there. The fundamentals are still very bearish in this market, as the USA by itself has over 14 trillion cubic feet of proven gas in the wild. The supply that is proven should be able to power the US for well over 200 years, and this will be a massive overhang for this market for the long-term.

The recent breaking of the $4 mark was a significant break of significant support. Once that area gave way, we had measured the previous consolidation area between $4 and $5, and projected a downside target of $3 for the intermediate-term. The market looks very sick indeed.

The bounce during the session on Monday looks set to be a “dead cat bounce” that the sellers will more than likely step in and get short from. The market continues to offer selling opportunities every time the market bounces, and we think this should continue to do so. The market should continue to fail at the larger “round numbers” such as the 3.75 and 4.00 levels. Any signs of weakness should be sold in this obviously broken market.

Gold Technical Analysis October 11, 2011

Gold markets rose on the Monday session as traders got very bullish equities and “risk on” trades in general. However, as the market has been so choppy lately, the smart trader is buying gold as a hedge against all of the volatility out there. The US Dollar found itself on the back foot during the session, and this also helped to propel the market forward.

The technical picture still looks to be in a consolidative phase, and that a base could be forming in order to resume the uptrend that we have seen over the last ten years. The $1,675 level seems to be the top of the range that has to be broken to the upside in order to get long in this market. The downside is protected by massive support in the $1,600 range.

The recent action in the gold markets has been a buying opportunity in an otherwise parabolic (at times) market. The pullbacks will continue to be seen as buying opportunities to us as we continue to believe in the gold story overall. As long as governments around the world are in a race to devalue their currencies, gold should continue to appreciate against most, if not all currencies. The gold market finds itself in a good vs. good situation – it is a “safe haven”, and it is also a “risk asset”, because of this, it can rise in both scenarios. This is why we are still so bullish on the yellow metal as it is one of the few markets that can claim duel status.

EUR/USD Technical Analysis October 10, 2011

EUR/USD originally rose during the session on Friday as the Non-Farm Payroll numbers came out stronger than expected. However, with the ratings agencies cutting the ratings of Spain and Italy, the markets sold off later in the session. The pair managed to retest the 1.35 level, but failed and printed a shooting star. This is a very bearish sign, and we are more than willing to sell on a break of the Friday low.

USD/JPY Technical Analysis October 10, 2011

USD/JPY continues to sit in its tight range as the trading world isn’t ready to buy this pair with any great conviction, but the Bank of Japan isn’t willing to let them sell it either. The result is a 100 pip range, and a scalper’s delight. We are still recommending buying at lower levels, somewhere around the 76 handle, but only hanging on to the pair for about 50 pips in gains. There are now no real ways to play this pair for any great length of time as it is so tight at the moment.

GBP/USD Technical Analysis October 10, 2011

GBP/USD rose on Friday as the Non-Farm Payroll report came out better than expected. This pushed the “risk on” trade forward, and the cable gained as a result. Also, the technical set up from the Thursday session (a hammer) got triggered, and pushed more buyers into the market. The late US session trading saw a bit of a fade, but in general: it looks like cable is trying to base at these levels. The pair looks like it is going to fight the downdraft at the 1.53 level. Although this pair looks bearish overall, we think that there are much simpler trends to follow at this point such as the AUD/USD, EUR/USD, and NZD/USD pairs.

USD/CHF Technical Analysis October 10, 2011

USD/CHF rose on Friday, and the Dollar is starting to look more and more strong. The Franc is no longer able to be used as a safe haven, and with the downgrades of both Spain and Italy during the Friday session, it makes sense that the USD rose in value. The breaking of the Thursday shooting star is a place we would be interested in buying this pair. We are not selling since the Swiss National Bank is actively working against the appreciation of the Franc.

EUR/CHF Technical Analysis October 10, 2011

The EUR/CHF pair rose again on Friday and the pair is even pressing the top of the Thursday shooting star. The pair looks bullish, and we cannot sell because of the Swiss National Bank and it’s “line in the sand” at the 1.20 level. We like buying, but have a hard time getting overly bullish until the EU gets its collective act together. However, there is no way to sell this pair – so we are alright with buying dips at this point.

AUD/USD Technical Analysis October 10, 2011

AUD/USD rose on the session for Friday as the trading world celebrated the better than expected Non-Farm Payroll report out of America. However, the downgrade of both Spain and Italy later in the day put a damper on the rise in equity markets. With the Aussie being so risk-sensitive, this pair rose strongly, only to fall and form a massive shooting star right in the middle of a cluster of orders that are serving as resistance. The result is a bearish pattern that calls for selling on a break of the Friday lows. With the global economy on pins and needles, it isn’t hard to imagine bad news coming out and triggering the continuation of a down move in this pair.

USD/CAD Technical Analysis October 10, 2011

USD/CAD fell on Friday, but managed to bounce in the later hours as the pair retested the 1.03 level. We mentioned that this area could be a place to see support and a potential bounce, and the resulting daily candle is a hammer – a bullish sign. Because of this, we like buying this pair on a break of the high from the Friday session. We know the 1.0650 – 1.07 level is massive resistance, but if it gives way – this pair skyrockets. We are not interested in selling at this point.

NZD/USD Technical Analysis October 10, 2011

NZD/USD rose on Friday, and even pierced the 0.78 level at one point. The pair then fell later in the session, and formed a shooting star in the middle of the cluster of orders we discussed yesterday. The pair has failed to push though that area, and the shooting star shows just how much trouble the pair is having in gaining in this market. With the Kiwi dollar being so sensitive to global risk, we still like selling as there are so many headwinds to the global economy out there. With this in mind, we see the sell signal as being a breaking of the Friday low with an understanding that the 0.75 level will be supportive. If we break the 0.75 level – this pair falls much farther.